Japan experienced the 1989 crash that ended the Nikkei 225’s great late-1980s boom. The Japanese benchmark reached its record closing level of 38,915.87 on December 29, 1989, before entering a prolonged decline.
The boom had been fueled by rapidly rising land and equity prices, easy credit, and strong optimism about Japan’s economy. When the Bank of Japan tightened monetary policy, asset prices began to fall. Banks were left with large amounts of impaired loans linked to inflated real-estate values.
The collapse did not produce only a brief stock-market correction. It helped usher in Japan’s “Lost Decades,” a period marked by weak growth, falling prices at times, and banking-sector stress. The Nikkei’s 1989 peak was not surpassed until 2024, a commonly cited illustration of the crash’s long-lasting effect.